Beijing still has to approve terms of any deal that would help rejuvenate Rover's model range and give state-run SAIC a beachhead in Europe as well as access to technology and expertise, the companies said.
"In fact, we're still in negotiations. There's been no final conclusion. As to the investment or scope of cooperation, we're still unsure," Xue Hao, a spokesman for Shanghai Automotive, says. "We don't know when anything will be formalised."
Citing an unnamed senior management source, the Times newspaper said SAIC, one of China's top three automakers, found British media reports over the weekend of an imminent billion-pound venture "embarrassing".
"The programme of the deal is still under discussion and we still have to talk about many details," the Times quoted the unnamed source as saying. "We read in the British press that we are going to invest £1bn in Rover, but it's not like that. That's not how it works."
MG Rover spokesman Stewart McKee said the media, and not Britain's last independent volume carmaker, had introduced the billion pound figure. He expressed confidence that the partners would strike a deal by early next year on forming a joint venture.
"The purpose of the joint venture company is the development of new products which will take investment from Shanghai Automotive and will take skills, design and engineering expertise from MG Rover," he said.
The precise level of ownership of the venture was not cast in stone, he said, but added: "The principle is that SAIC will have a majority interest in the joint venture company but I think you will find that in a practical way the partnership is even because we both need each other evenly."
The Independent newspaper reported on Saturday that SAIC would own 70% and MG Rover 30% of the venture to develop and produce cars in China and England. It aimed to make 1 million cars a year. SAIC produced 597,000 cars in 2003, and the company also makes buses, trucks, motorcycles and tractors.
The billion pound figure reflected estimates of what it would cost to develop a new range of models, a spokesman said, the first of which would be a replacement for the Rover 45 due in 2006. A new small car, a large executive model and a new sports car were set to follow.